A few years ago, when my wife and I were ignoring over $50,000 of debt and yolo-ing our way around Orlando, we joined the many other proud mousekateers by having annual passes at Disney World. Fortunately, we grew tired of the endless traffic, ride queues, overpriced food/drinks/souvenirs, etc. and gave up our passes at the end of 2019. Although we had not yet achieved complete financial sobriety, it was a start in the right direction. Eventually, we allowed our financial conscience to be our guide and cleaned up the $50,000 mess completely.
Some people have already stopped reading this because for some, Disney life is a real thing and the fifth pillar to survival (aside from shelter, food, utilities, and transportation). But at what cost?
Before throwing out some numbers, it is safe to say that there are many Disney fanatics who have vacationed at the resort and/or stayed loyal through the annual pass fiasco, choosing to spend money in this way rather than paying down their consumer debt.
Let’s pretend that there is family of four in Central Florida with the average “debt trifecta” of car loans, credit cards, and student loans. Recent reporting has shown that the average American student loan debt is $28,950 (Forbes) with an average monthly payment between $200-$299 (usnews.com), and average interest rate of 5.8% (nerdwallet.com & firstrepublic.com). The average credit card balance per is $5,525 and minimum payment of $110 (financeband.com) with an average interest rate of 20.63% (creditcards.com). Finally, if we level out the loan amount and interest rate of new and used cars, the average American has a car loan balance of $34,606.50 (Lending Tree), monthly payment of $647, and interest rate of 9.2% (nerdwallet.com).
Although there is a giant mess of debt, this family is insistent on making the Magic Kingdom a part of their world. They deserve it, and Disney accepts monthly payments! So, they decide to continue the fantasy and renew for another year of passes. The cost of a Florida resident “Pirate” pass is currently $969 per person for one year, or a "low monthly payment" of $49.39/month. Let’s use round numbers and call this $50, times four family members, for a total of $200 a month. Now, let’s (very conservatively) double that amount to account for food, drinks, souvenirs, and Genie passes to avoid 150-minute waits on their favorite rides, and call it $400 per month that the family will spend.
Because this family has decided to just keep swimming in denial, and they can only make the minimum payments on their debt trifecta as described above, let’s see how long it will take them to pay off that incredible amount of money:
Scenario #1: Minimum Payments Only
Next, let's see what would happen if this family decided to drop Disney passes to get out of the hole, and use the $400 each month to help with their debt snowball:
Scenario #2: Debt Snowball with Minimum Payments Plus $400 Each Month
As shown above, if the family keeps at the pace they are going (assuming they will acquire no additional debt, which I find as improbable), it will take over 14 years from now for their debt carriage to turn into a pumpkin. Conversely, if they decided to stop wishing on a loan forgiveness star (student loan payments are expected to resume at the end of August), give up the Disney passes, and use that $400 per month saved to accelerate the debt snowball, their debt would be frozen in five years.
Disney World is a magical place, and admittedly my family has shared some amazing times at the parks and resorts. However, it is also a non-essential luxury that I would not recommend being prioritized over a serious debt problem or ensuring your household is covered with a full emergency fund.
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